The Dick Smith Factor and What Do To Do

September 26, 2018

As you would have all seen Dick Smith has caused quite an internet stir over the past 2 to 3 weeks. As a result we have heard from many of you asking us to link this video and information to your social media, newsletters and websites.

Now many of you have may have sensed our trepidation in doing so and here’s why:

Firstly, lets just look at the facts, what Dick Smith says is not untrue but nor are his facts as well-researched as they should have been. Since the beginning of time in the travel/accommodation area there has been other people selling our products and expecting to be paid for this. I myself worked for a travel wholesaler in the days before complete internet infiltration (I know I’m showing my age!)

If you’re an independent property wanted to join this program you had to pay a substantial fee to join and be displayed in the brochures, and agree to pay commission of up to 15%. Travel agents have been charging commission since they have existed. In a world where someone else is selling your product they will expect to be paid for providing that service.

Some properties would never be found without the help of a travel agent, wholesaler or OTA – so these companies do have an important place in our sales model to help with visibility in the market place and brand awareness.

You do not have to sign up to these services, no-one is being forced, but you will not have any visibility on that channel if you do not. For the majority standard commission is 15%, and you decide if you want to add extra discounts or extra commission. As an independent property there is no other way to match the advertising dollars of these OTAs, so my mantra has always been to ashamedly use their reach into the public market place and then capture the customer once they’re at your door.

We don’t need to push the Dick Smith video in our customer’s faces because it is making it’s way around the internet and into our customers lounge rooms without us participating. I have already had word that many of you have had customers ring directly citing having seen Dick’s video online, or on A Current Affair and many other places.

We work hard here at Koncept Konnect to build strong relationships with the OTAs, particularly Expedia and Booking.com to ensure that our clients, as small independent properties, have a voice in a world full of big chains and large hotel companies. So we walk a fine line trying to build direct business and ensure we get our fair share of the online travel agency business.

The playing field has definitely changed in that in the online world to be at the top of any search is helpful, and yes the big OTAs have got the dollars to throw at this and will most likely win this competition every time. So how do we compete? We only ever let a customer book with the OTA once. At a Front Desk level you ensure that YOUR customer understands why they should book direct the next time they come to stay. Also make sure you have your very best deal available to your direct bookers on your website and keep your social media, newsletter and blog content as fresh and up to date as possible.

As for Dick’s comments regarding taxes, that is a government issue and not one that we can change in the day to day running of your business. You can certainly write letters to your Local, State and Federal Members of parliament but keep in mind that these large companies provide plenty of jobs for Australians, who all pay taxes just as you and I do. In fact Agoda has just recently expanded their Australian offices and employed many more people.

It is also interesting to note that there is a case before the Courts in Amsterdam at present to argue that OTAs will not be allowed to use rate parity in their algorithms to determine your page ranking. We’ll be watching this case with great interest.

So for now, our recommendation is to let the Dick Smith video and subsequent discussion take it’s natural course without pushing it further on your websites, newsletters and social media. Certainly take the opportunity to discuss booking direct with your guests and point out the benefits for them, but keep in mind that there is room in the market place for everybody.